佛州州立《微观经济学》题库第六版 Ch10.doc

CHAPTER 10 Market Power Monopoly and Monopsony 364 MULTIPLE CHOICE Section 10 1 easy1 When the demand curve is downward sloping marginal revenue is a equal to price b equal to average revenue c less than price d more than price easy2 For the monopolist shown below the profit maximizing level of output is a Q1 b Q2 c Q3 d Q4 e Q5 TEST BANKCHAPTER 10 SIXTH EDITIONMARKET POWER MONOPOLY AND MONOPSONY 365 easy3 How much profit will the monopolist whose cost and demand curves are shown below earn at output Q1 a 0CDQ1 b 0BEQ1 c 0AFQ1 d ACDF e BCDE easy4 Which of the following is NOT true regarding monopoly a Monopoly is the sole producer in the market b Monopoly price is determined from the demand curve c Monopolist can charge as high a price as it likes d Monopoly demand curve is downward sloping easy5 Which of the following is true at the output level where P MC a The monopolist is maximizing profit b The monopolist is not maximizing profit and should increase output c The monopolist is not maximizing profit and should decrease output d The monopolist is earning a positive profit easy6 Compared to the equilibrium price and quantity sold in a competitive market a monopolist will charge a price and sell a quantity a higher larger b lower larger c higher smaller d lower smaller e none of these CHAPTER 10TEST BANK MARKET POWER MONOPOLY AND MONOPSONYSIXTH EDITION 366 easy7 Assume that a profit maximizing monopolist is producing a quantity such that marginal revenue exceeds marginal cost We can conclude that the a firm is maximizing profit b firm s output is smaller than the profit maximizing quantity c firm s output is larger than the profit maximizing quantity d firm s output does not maximize profit but we cannot conclude whether the output is too large or too small easy8 To find the profit maximizing level of output a firm finds the output level where a price equals marginal cost b marginal revenue and average total cost c price equals marginal revenue d all of the above e none of the above easy9 As the manager of a firm you calculate the marginal revenue is 152 and marginal cost is 200 You should a expand output b do nothing without information about your fixed costs c reduce output until marginal revenue equals marginal cost d expand output until marginal revenue equals zero e reduce output beyond the level where marginal revenue equals zero easy10 Suppose that a firm can produce its output at either of two plants If profits are maximized which of the following statements is true a The marginal cost at the first plant must equal marginal revenue b The marginal cost at the second plant must equal marginal revenue c The marginal cost at the two plants must be equal d all of the above e none of the above easy11 The monopolist has no supply curve because a the quantity supplied at any particular price depends on the monopolist s demand curve b the monopolist s marginal cost curve changes considerably over time c the relationship between price and quantity depends on both marginal cost and average cost d there is a single seller in the market e although there is only a single seller at the current price it is impossible to know how many sellers would be in the market at higher prices easy12 When a per unit tax is imposed on the sale of a product of a monopolist the resulting price increase will a always be less than the tax b always be more than the tax c always be less than if a similar tax were imposed on firms in a competitive market d not always be less than the tax TEST BANKCHAPTER 10 SIXTH EDITIONMARKET POWER MONOPOLY AND MONOPSONY 367 easy13 The monopoly supply curve is the a same as the competitive market supply curve b portion of marginal costs curve where marginal costs exceed the minimum value of average variable costs c result of market power and production costs d none of the above easy14 For a monopolist changes in demand will lead to changes in a price with no change in output b output with no change in price c both price and quantity d any of the above can be true easy15 Use the following two statements to answer this question I For a monopolist at every output level average revenue is equal to price II For a monopolist at every output level marginal revenue is equal to price a Both I and II are true b I is true and II is false c I is false and II is true d Both I and II are false e Statements I and II could either be true or false depending upon demand moderate16 Which of the following is NOT true for monopoly a The profit maximizing output is the one at which marginal revenue and marginal cost are equal b Average revenue equals price c The profit maximizing output is the one at which the difference between total revenue and total cost is largest d The monopolist s demand curve is the same as the market demand curve e At the profit maximizing output price equals marginal cost moderate17 If a monopolist sets her output such that marginal revenue marginal cost and average total cost are equal economic profit must be a negative b positive c zero d indeterminate from the given information moderate18 A monopolist has equated marginal revenue to zero The firm has a maximized profit b maximized revenue c minimized cost d minimized profit CHAPTER 10TEST BANK MARKET POWER MONOPOLY AND MONOPSONYSIXTH EDITION 368 moderate19 A monopolist has determined that at the current level of output the price elasticity of demand is 0 15 Which of the following statements is true a The firm should cut output b This is typical for a monopolist output should not be altered c The firm should increase output d None of the above is necessarily correct difficult20 A monopolist has set her level of output to maximize profit The firm s marginal revenue is 20 and the price elasticity of demand is 2 0 The firm s profit maximizing price is approximately a 0 b 20 c 40 d 10 e This problem cannot be answered without knowing the marginal cost Scenario 1 Barbara is a producer in a monopoly industry Her demand curve total revenue curve marginal revenue curve and total cost curve are given as follows 1604 QP 2 400 25 TRQQ400 5 MRQ4 TCQ4 MC moderate21 Refer to Scenario 1 How much output will Barbara produce a 0 b 22 c 56 d 72 e none of the above moderate22 Refer to Scenario 1 The price of her product will be a 4 b 22 c 32 d 42 e 72 moderate23 Refer to Scenario 1 How much profit will she make a 996 b 0 c 1 296 d 1 568 e none of the above TEST BANKCHAPTER 10 SIXTH EDITIONMARKET POWER MONOPOLY AND MONOPSONY 369 Scenario 2 A monopolist faces the following demand curve marginal revenue curve total cost curve and marginal cost curve for its product Q 200 2P MR 100 Q TC 5Q MC 5 moderate24 Refer to Scenario 2 What level of output maximizes total revenue a 0 b 90 c 95 d 100 e none of the above moderate25 Refer to Scenario 2 What is the profit maximizing level of output a 0 b 90 c 95 d 100 e none of the above moderate26 Refer to Scenario 2 What is the profit maximizing price a 95 00 b 5 00 c 52 50 d 10 00 moderate27 Refer to Scenario 2 How much profit does the monopolist earn a 4512 50 b 4987 50 c 475 00 d 5 00 moderate28 Refer to Scenario 2 Suppose that a tax of 5 for each unit produced is imposed by state government What is the profit maximizing level of output a 0 b 90 c 95 d 100 e none of the above CHAPTER 10TEST BANK MARKET POWER MONOPOLY AND MONOPSONYSIXTH EDITION 370 moderate29 Refer to Scenario 2 Suppose that a tax of 5 for each unit produced is imposed by state government What is the profit maximizing price a 90 00 b 10 00 c 55 00 d 52 50 difficult30 Refer to Scenario 2 Suppose that a tax of 5 for each unit produced is imposed by state government How much profit does the monopolist earn a 4050 b 4950 c 450 d 5 difficult31 Refer to Scenario 2 Suppose that in addition to the tax a business license is required to stay in business The license costs 1000 What happens to profit a It increases by 1000 b It decreases by 1000 c It decreases by less than 1000 d It stays the same difficult32 Refer to Scenario 2 Suppose that in addition to the tax a business license is required to stay in business The license costs 1000 What is the profit maximizing level of output a 0 b 90 c 95 d 100 e none of the above Scenario 3 The demand curve and marginal revenue curve for red herrings are given as follows Q 250 5P MR 50 0 4Q moderate33 Refer to Scenario 3 What level of output maximizes revenue a 0 b 45 c 85 d 125 e 245 moderate34 Refer to Scenario 3 The marginal cost of red herrings is given as MC 0 6Q What is the profit maximizing level of output a 0 b 25 c 50 d 60 e 125 TEST BANKCHAPTER 10 SIXTH EDITIONMARKET POWER MONOPOLY AND MONOPSONY 371 moderate35 Refer to Scenario 3 At the profit maximizing level of output demand is pletely inelastic b inelastic but not completely inelastic c unit elastic d elastic but not infinitely elastic e infinitely elastic moderate36 Refer to Scenario 3 Compared to a competitive red herring industry the monopolistic red herring industry a produces more output at a higher price b produces less output at a higher price c produces more output at a lower price d produces less output at a lower price e not enough information to relate the monopolistic red herring industry to a competitive industry difficult37 Refer to Scenario 3 Suppose that a tax of 5 per unit of output is imposed on red herring producers The price of red herring will a not change b increase by less than 5 c increase by 5 d increase by more than 5 e decrease Scenario 4 The demand for tickets to the Meat Loaf concert Q is given as follows Q 120 000 2 000P The marginal revenue is given as MR 60 001Q The stadium at which the concert is planned holds 60 000 people The marginal cost of each additional concert goer is essentially zero up to 60 000 fans but becomes infinite beyond that point moderate38 Refer to Scenario 4 Given the information above what are the profit maximizing number of tickets sold and the price of tickets a 0 60 b 20 000 50 c 40 000 40 d 60 000 30 e 80 000 20 CHAPTER 10TEST BANK MARKET POWER MONOPOLY AND MONOPSONYSIXTH EDITION 372 moderate 39 Refer to Scenario 4 Suppose that the municipal stadium authority imposes a tax of 10 per ticket on the concert promoters Given the information above the profit maximizing ticket price would a increase by 10 b increase by 5 c not change d decrease by 5 e decrease by 10 moderate40 Refer to Scenario 4 A multiplant monopolist can produce her output in either of two plants Having sold all of her output she discovers that the marginal cost in plant 1 is 30 while the marginal cost in plant 2 is 20 To maximize profits the firm will a produce more output in plant 1 and less in the plant 2 b do nothing until it acquires more information on revenues c produce less output in plant 1 and more in plant 2 d produce less in both plants until marginal revenue is zero e shut down plant 1 and only produce at plant 2 in the future Scenario 5 A firm produces garden hoses in California and in Ohio The marginal cost of producing garden hoses in the two states and the marginal revenue from producing garden hoses are given in the following table CaliforniaOhio QcMCcQoMCoQc oMR 1213124 2324220 3536316 4948412 51651258 62461764 moderate41 Refer to Scenario 5 From the perspective of the firm what is the marginal cost of the 5th garden hose a 4 b 5 c 16 d 12 e 8 moderate42 Refer to Scenario 5 How many garden hoses should be produced in California in order to maximize profits a 1 b 2 c 3 d 4 e 5 Scenario 6 TEST BANKCHAPTER 10 SIXTH EDITIONMARKET POWER MONOPOLY AND MONOPSONY 373 John is the manufacturer of red rubber balls Q He has a red rubber ball manufacturing plant in California Florida and Montana The total cost of producing red rubber balls at each of the three plants is given by the following table CaliforniaFloridaMontana QcTCcQfTCfQmTCm 151814 21021628 315324312 420432416 525540520 630648624 735756728 840864832 945972936 105010801040 11infinity11infinity11infinity moderate43 Refer to Scenario 6 If red rubber balls can be produced at any of the three plants what is the marginal cost of 5th red rubber ball a 4 b 5 c 8 d 20 e none of the above easy44 Refer to Scenario 6 If red rubber balls can be produced at any of the three plants and John decides to produce 1 red rubber ball at which plant will he produce it a California b Florida c Montana d he is indifferent between California and Florida e he is indifferent between Florida and Montana difficult45 The demand curve and marginal revenue curve for red rubber balls are given as follows Q 16 P MR 16 2Q What level of output maximizes profit a 0 b 4 c 5 5 d 6 e b c and d all maximize profit easy46 What is the profit maximizing price a 10 b 20 c 3 d 40 e none of the above CHAPTER 10TEST BANK MARKET POWER MONOPOLY AND MONOPSONYSIXTH EDITION 374 moderate47 At the profit maximizing level of output demand is pletely inelastic b inelastic but not completely inelastic c unit elastic d elastic but not infinitely elastic e infinitely elastic difficult48 Suppose that a tax of 2 per unit of output is imposed on red rubber ball producers What level of output maximizes profit a 1 b 3 c 4 5 d 5 e b c and d are correct easy49 After the imposition of a tax of 2 per unit of output what is the profit maximizing price a 11 b 21 c 31 d 41 e none of the above TEST BANKCHAPTER 10 SIXTH EDITIONMARKET POWER MONOPOLY AND MONOPSONY 375 Scenario 7 The marginal revenue of green ink pads is given as follows MR 2500 5Q The marginal cost of green ink pads is 5Q moderate50 Refer to Scenario 7 How many ink pads will be produced to maximize revenue a 0 b 250 c 300 d 500 e none of the above moderate51 Refer to Scenario 7 How many ink pads will be produced to maximize profit a 50 b 250 c 500 d 800 e none of the above easy52 Refer to Scenario 7 Suppose that the firm chooses to produce 200 ink pads At this level of output the demand for ink pads is a inelastic b unit elastic c elastic d unit elastic moderate53 The marginal cost of a monopolist is constant and is 10 The marginal revenue curve is given as follows MR 100 2Q The profit maximizing price is a 70 b 65 c 60 d 55 e 50 difficult54 A multiplant firm has equated marginal costs at each plant By doing this a profits are maximized b costs are minimized given the level of output c revenues are maximized given the level of output d none of the above CHAPTER 10TEST BANK MARKET POWER MONOPOLY AND MONOPSONYSIXTH EDITION 376 Section 10 2 easy55 The elastic a firm s demand curve the greater its a less monopoly power b less output c more monopoly power d more costs easy56 Monopoly power results from the ability to a set price equal to marginal cost b equate marginal cost to marginal revenue c set price above average variable cost d set price above marginal cost easy57 What is the value of the Lerner index under perfect competition a 1 b 0 c infinity d two times the price moderate58 The more elastic the demand facing a firm a the higher the value of the Lerner index b the lower the value of the Lerner index c the less monopoly power it has d the higher its profit moderate59 The Lerner index measures a a firm s potential monopoly power b the amount of monopoly power a firm chooses to exercises when maximizing profits c a firm s potential profitability d an industry s potential market power moderate60 Assume that a firm s marginal cost is 10 and the elasticity of demand is 2 We can conclude that the firm s profit maximizing price is approximately a 20 b 5 c 10 d The answer cannot be determined without additional information moderate61 Use the following two statements to answer this question I A firm can exert monopoly power if and only if it is the sole producer of a good II The degree of monopoly power a firm possesses can be measured using the Lerner Index L P AC AC a Both I and II are true b I is true and II is false c I is false and II is true d Both I and II are false TEST BANKCHAPTER 10 SIXTH EDITIONMARKET POWER MONOPOLY AND MONOPSONY 377 moderate62 Suppose that the competitive market for rice in Japan was suddenly monopolized The effect of such a change would be a to decrease the price of rice to the Japanese people b to decrease the consumer surplus of Japanese rice consumers c to decrease the producer surplus of Japanese rice producers d a welfare gain for the Japanese people e increase the consumption of rice by the Japanese people Section 10 3 easy63 Which of the following is NOT associated with a high degree of monopoly power a A relatively inelastic demand curve for the firm b A small number of firms in the market c Significant price competition among firms in the market d Significant barriers to entry easy64 Which factors determine the firm s elasticity of demand a Elasticity of market demand and number of firms b Number of firms and the nature of interaction among firms c Elasticity of market demand number of firms and the nature of interaction among firms d None of the above easy65 When a drug company develops a new drug it is granted a making it illegal for other firms to enter the market until the expires a franchise franchise b copyright copyright c government license government license d patent patent moderate66 The firms in a market have decided not to compete with one another and have agreed to limit output and raise price a This practice is known as concentrating and is legal in the United States and Canada b This practice is known as collusion and is illegal in the United States c In this way firms take advantage of economies of scale d This is an effective barrier to entry but is illegal in the United States moderate67 Under which of the following scenarios is it most likely that monopoly power will be exhibited by firms a When there are few firms in the market and the demand curve faced by each firm is relatively inelastic b When there are many firms in the market and the demand curve faced by each firm is relatively inelastic c When there are few firms in the market and the demand curve faced by each firm is rel